As far as I know the card networks do insure the transaction in cases of fraud so the merchant is still paid. The same per swipe fee for $2 does not make sense for $2000.

I know in practice the merchant is left holding the bag with charge back fraud, but it is a devil's advocate point.

Hmm... I thought as much but then I learned that handling cash does incure non-zero cost (actually it's quite expensive and annoying to boot).

All in all after this change I saw adoption of card payments skyrocket and it's possible to pay virtually everywhere (even in the weirdes most rural places)